U.S. foreclosure activity rose again in the first half of 2026, with 227,548 properties receiving filings, up 21% from the same period in 2025, according to ATTOM’s midyear foreclosure report released Thursday.

The report — which tracks default notices, scheduled auctions and bank repossessions — shows total foreclosure filings are also 28% higher than in the first half of 2024. ATTOM CEO Rob Barber said in the company announcement that the market is “gradually returning to more typical patterns,” even as the data points to growing financial stress for some homeowners.

“The increase is being driven by a mix of financial pressure and continued normalization after several years of unusually low foreclosure activity. Higher taxes, insurance, and everyday household costs are making it harder for some borrowers to recover once they fall behind, even when the mortgage payment itself has not changed,” said Mirza Hodzic, founder and managing director of BlackWolf Advisory Group.

“The 18 percent rise in foreclosure starts tells us more loans are entering the pipeline, while the 33 percent increase in REO shows more are also reaching the end of the process. That combination will keep pressure on servicers through the second half, especially in loss mitigation, attorney oversight, property preservation, and REO management,” Hodzic added.

Higher volumes, faster timelines

In the first six months of 2026, foreclosure filings were recorded on 0.16% of U.S. housing units, or one in every 632 homes.

Foreclosure starts remain the main driver of the increase. Lenders initiated the process on 164,566 properties from January through June, up 18% from the same period in 2025 and 66% higher than the first half of 2020.

Completed foreclosures, or real estate-owned (REO) properties, are also on the rise. Lenders repossessed 27,983 properties in the first half of 2026, a 33% increase from a year earlier, although still 26% below levels seen in the first half of 2020.

At the same time, foreclosure timelines are shrinking. Properties foreclosed in the second quarter of 2026 spent an average of 563 days in the process, ATTOM reported. That was shortest timeline since 2013 — down 2% from Q1 2026 and 13% lower than Q2 2025.

Timelines remain highly uneven by state. Louisiana recorded the longest average at 3,491 days for homes foreclosed in Q2, followed by Hawaii (2,293 days), New York (2,007 days), Connecticut (1,626 days) and Nevada (1,507 days). The quickest states were Texas (155 days), New Hampshire (157 days), Wyoming (173 days), West Virginia (196 days) and Alaska (199 days).

Which states and metros have the most risk?

Risk is concentrated in a handful of states and metros, with Florida and the Southeast featuring prominently.

Nationwide for the first half of 2026, states with the highest foreclosure rates were:

  • Florida: 0.27% of housing units with a filing (one in every 373 homes), 27,494 properties affected
  • South Carolina: 0.26% (one in every 381 homes), 6,419 properties
  • Indiana: 0.25% (one in every 402 homes), 7,408 properties
  • Delaware: 0.25% (one in every 404 homes), 1,148 properties
  • Illinois: 0.23% (one in every 435 homes), 12,533 properties

Other states in the top 10 foreclosure rates included Nevada and New Jersey (both at 0.22%), Ohio (0.20%), and Maryland and Utah (both at 0.19%).

By volume, the most foreclosure starts in the first half of 2026 were in:

  • Texas: 20,739 starts
  • Florida: 20,358
  • California: 16,040
  • Georgia: 8,164
  • Illinois: 7,424

For REO activity, Texas again led with 3,322 completed foreclosures, followed by California (2,644), Florida (2,070), Pennsylvania (1,893) and Illinois (1,543).

Among 227 metropolitan areas with at least 200,000 people, the worst foreclosure rates in the first half of 2026 were posted in:

  • Punta Gorda, Florida: 0.50% of housing units with foreclosure filings
  • Lakeland, Florida: 0.48%
  • Columbia, South Carolina: 0.43%
  • Macon, Georgia: 0.36%
  • Fayetteville, North Carolina: 0.36%

Other large metros in the top 10 included Cape Coral, Florida (0.35%); Cleveland (0.33%); Jacksonville, Florida (0.31%); Ocala, Florida (0.31%); and Jacksonville, North Carolina (0.31%).

“The geographic concentration is important,” Hodzic said. “Florida, South Carolina, Indiana, and several Southern markets continue to show higher foreclosure rates, so servicers should not treat this as a uniform national trend. Capacity, vendor coverage, and borrower outreach need to reflect where the pressure is actually building.”

Government lending channel is risk driver

The ATTOM data confirms that foreclosure activity is rising off historically low, post-pandemic levels and is spreading across both judicial and nonjudicial states. For mortgage servicers and investors, the combination of more starts and shorter timelines means pipelines could move more quickly from delinquency to REO, requiring tighter loss-mitigation and disposition strategies.

Donna Schmidt, president and CEO of DLS Servicing, said that government-backed mortgages through the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) are the two main drivers of foreclosure activity.

In the VA loan space, Schmidt said the decision to discontinue the “very costly” Veterans Affairs Servicing Purchase (VASP) program has led to more foreclosures, since there was no payment reduction option for these borrowers while VA was developing a new loss-mitigation waterfall.

“Even under the new waterfall, released in June of 2026, but mandatory for servicer participation by November 28, 2026, there are no expressed payment lowering options,” Schmidt said.

“Practically the only time a veteran borrower may receive a lower modified payment is if the note rate is higher than the modified market rate. Under current market conditions that will be a very rare event. Absent a lower payment option for veteran borrowers, their only option is a short sale or foreclosure.”

In the FHA loan space, Schmidt remarked that the “pendulum has swung in the other direction” after years of lenient loss-mitigation policies related to the pandemic. Failure rates for required trial payment plans of three months prior to reinstatement in loss mitigation have been as high as 40% to 60%.

“Additionally, FHA also has limited the borrower to only one permanent loss-mitigation option within 24 months,” she said. “This too is pushing more loans into foreclosure. Finally, FHA originations saw debt-to-income ratios rise to 50% or more for 29% of the loans originated since 2022. All of these factors have led to higher defaults and more foreclosures.

“Other than the inherent deficiencies with the VA loss-mitigation program, the increased foreclosures in the FHA space is a correction to more normal activity. Foreclosures throughout the COVID era were artificially suppressed.  There will be inflated activity over the next one to two years while that correction occurs.”

Lenders and originators operating in high-risk states like Florida, South Carolina, Indiana and parts of the Mountain West may want to sharpen pre-foreclosure outreach and counseling, as rising distress can pressure local home values and increase repurchase and reputational risk.

Real estate agents and investors in certain metros could see more distressed inventory, but likely in a market that is still far from the foreclosure volumes seen during the last housing crisis.

This article was written by Neil Pierson with the assistance of HousingWire Automation, then reviewed by a HousingWire editor before publication.

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